When in opposition, Charles Hendry, the energy minister, accused the Labour government of failing to encourage the construction of new facilities.

Our local gas storage facility is now going ahead, despite opposition from the local Tory MP and Tory controlled council, because the Labour government over-ruled them. Charles Hendry, opposition spokesman at the time, did nothing to help._________________http://biffvernon.blogspot.co.uk/

The thrust of the article seems to be to highlight the relative insecurity of our supply. Whilst no problems are actually imminent, it's an amber light._________________Andy Hunt
http://greencottage.burysolarclub.net

I suspect that we will scrape through this winter OK.
The weather is now much milder, with gas use below average, and a very slight filling of storage.
A return of cold weather is possible but should be relatively brief.
LNG imports have helped considerably, and even if not much more LNG arrives this winter we should be OK.

In the longer term though we cant count on much LNG as others may outbid us for it.
Imagine the panic if an LNG tanker or terminal blows up !_________________"Installers and owners of emergency diesels must assume that they will have to run for a week or more"

Yes, it does look a bit more like we might make it through now, as storage withdrawals have slowed in the milder weather, and there's even been a bit injected on some days. Have to wait and see what the weather does though..._________________Mike

The thrust of the article seems to be to highlight the relative insecurity of our supply. Whilst no problems are actually imminent, it's an amber light.

Not how I see the article. For a start, it's mis-titled. "Supplies" are not at a low. Levels of gas in storage are, but that is not the same thing at all. In any case, what would you expect after the coldest December in 120 years?

The whole point is that the UK has been able to draw on plenty of sources of supply as well as storage, which is thanks to large-scale private-sector investment in extensive and very well-diversified import and domestic production capacity.

If it's so great to have lots of storage capacity, how come prices are higher on the Continent?

Last edited by Keepz on Wed Jan 12, 2011 4:13 am; edited 1 time in total

I think the last line says it all - despite all these LNG reassurances, prices haven't fallen. The Market is not convinced.

Do you mean this last line?

Quote:

On the curve, prices also came off in line with the prompt, with the front-month shedding 0.85 p/th in value to change hands at 57.25 p/th by midday London time while the front-quarter fell 0.90 p/th to 54.20 p/th.

Natural gas for delivery in the summer was trading at a 0.80 p/th discount to Tuesday's close, although traders said the seasonal contracts were supported more further forward.

Because that seems to me to say precisely that prices have fallen, unless I am misunderstanding the meaning of the words "off", "shedding", "fell" and "discount".

On Friday morning, gas flows from Rough fell to zero, while the site covered around five percent of gas demand on Thursday, but British gas prices failed to react to the cut in storage supplies.

Not following you at all. Are you suggesting that prices ought to have fallen in response to gas flows from Rough being reduced? How do you make that out? Seems to me that if the market was nervous and supply on a knife edge because of low storage levels, then prices ought to have gone up in response to a supply cut, so the fact that they didn't react suggests that the market was comfortably able to obtain supplies from elsewhere.

If it's so great to have lots of storage capacity, how come prices are higher on the Continent?

Because security of supply is worth paying a premium for?

Domestic customers in the UK do already pay a premium for a high level of security of supply. They cannot be cut off in case of shortfall until all other larger consumers (factories, power stations etc) have been.

If larger gas purchasers think security of supply is worth paying a premium for, they have that option. They can take out firm supply contracts, or buy gas themselves in advance and put it in storage to be withdrawn only by themselves when they want it. They could even construct their own storage capacity. If they'd rather pay a lower price and take more of a chance on the market, that's their right, their call and their problem.

On what basis do you think they have higher security of supply on the Continent than we have here? They're having to pay high prices to import gas from the UK, where you seem to think gas supply is on a knife edge and in imminent danger of collapse due to low storage capacity. Where is the benefit of their greater storage capacity?

Quote:

Why do you think traders have been using language like, "it's really worrying"? (earlier article)

Sorry, I've looked through all the articles that have been recently posted, but I can't see any reference to a trader saying anything like "it's really worrying".

On Friday morning, gas flows from Rough fell to zero, while the site covered around five percent of gas demand on Thursday, but British gas prices failed to react to the cut in storage supplies.

Not following you at all. Are you suggesting that prices ought to have fallen in response to gas flows from Rough being reduced? How do you make that out? Seems to me that if the market was nervous and supply on a knife edge because of low storage levels, then prices ought to have gone up in response to a supply cut, so the fact that they didn't react suggests that the market was comfortably able to obtain supplies from elsewhere.

Storage supplies fell because demand fell. When demand falls, so does price normally, but in this case, it didn't, presumably because the market was still not confident of adequate supplies despite the fall in demand._________________Andy Hunt
http://greencottage.burysolarclub.net

If it's so great to have lots of storage capacity, how come prices are higher on the Continent?

Because security of supply is worth paying a premium for?

If larger gas purchasers think security of supply is worth paying a premium for, they have that option. They can take out firm supply contracts, or buy gas themselves in advance and put it in storage to be withdrawn only by themselves when they want it. They could even construct their own storage capacity. If they'd rather pay a lower price and take more of a chance on the market, that's their right, their call and their problem.

And you think that the country as a whole should be viewed in the same way? Why don't I find that reassuring?

Quote:

On what basis do you think they have higher security of supply on the Continent than we have here? They're having to pay high prices to import gas from the UK, where you seem to think gas supply is on a knife edge and in imminent danger of collapse due to low storage capacity. Where is the benefit of their greater storage capacity?

They have strategic stocks which means they are less vulnerable to interruptions in supply. If I double the size of my log store, it will cost me more to build, but if it snows and the delivery man can't get through, I am much more likely to have logs left. Not rocket science, is it?

If European countries choose to pay a higher price for market gas rather than depleting their own storage, does this not say something about the value of strategic storage?

Quote:

Quote:

Why do you think traders have been using language like, "it's really worrying"? (earlier article)

Sorry, I've looked through all the articles that have been recently posted, but I can't see any reference to a trader saying anything like "it's really worrying".

The problem seems to be over, for this winter unless some unlikely event results in a major drop in imports.
The weather is very mild with gas consumption well below normal, it is forcast to remain mild for at least week. Any return of severe weather after that should be fairly brief.
Storage is being filled at a good rate.

The relatively high price of gas has encouraged coal burning instead of gas for power generation._________________"Installers and owners of emergency diesels must assume that they will have to run for a week or more"